Trump's lonely attacks on Powell

Politico

5 hours ago

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Quick Fix
President Donald Trump called on lawmakers to work over Federal Reserve Chair Jerome Powell for keeping interest rates elevated. In the first of two scheduled hearings on central bank policy this week, GOP Congress members left their pipes and brass knuckles at home.
House Financial Services Republicans on Tuesday offered little pushback to the Fed chair's case for keeping borrowing costs steady until there's greater clarity on how the president's tariff policies ultimately affect consumer prices. Reps. Mike Lawler of New York and Bill Huizenga of Michigan offered up resistance — with Lawler channeling Trump in saying Powell is already too late when it comes to easing financial conditions — but no one went the full monty in echoing the president's name-calling or public harangues.
The Hill's tepid resistance to Powell on rates suggests there are still limits to how far most congressional Republicans will go when it comes to the Fed. Since returning to the White House, Trump has demonstrated an extraordinary ability to dictate the GOP's messaging and policy agenda. Yet few lawmakers are willing to match the president's theatrics when it comes to Powell, who has spent years building relationships with key members of both parties.
'There is relatively little policy reason to join that attack on Powell,' said Sarah Binder, a professor at George Washington University and a senior fellow in Governance Studies at the Brookings Institution. Inflation has fallen, and the labor market still seems to be humming along at a healthy pace, she added. 'It makes sense that Republicans might be a little hesitant to pour more fuel on the fire.' Powell is scheduled to testify before Senate Banking at 10 a.m. today.
Many GOP leaders — and Democrats, for that matter — would like to see the Fed bring down financing costs, particularly given the housing market's struggles. The combined effects of tariff uncertainty and tight financing conditions have created a challenging environment for central bank policymakers who hold increasingly divergent views on the rate path. Consumer confidence in the economic outlook is sputtering, according to a Conference Board survey released Tuesday, but so far the gloom hasn't been reflected in employment or inflation data. (Powell testified that the Fed could pivot to reducing rates if the tariff-related inflation many economists expect to arrive this summer is muted, or if the labor market softens).
The view within the White House is that the Fed chair's speculation about how tariff policies could affect inflation has held up Trump's ability to spur domestic manufacturing and private investment, both of which are fundamental to Trump's long-term economic goals. Federal Housing Finance Agency Director William Pulte — who last week called for Powell's resignation — posted Tuesday that the Fed chair's policies are hurting 'real people who work good & hard, and are just trying to pay their car loans, credit cards, & mortgages.'
Even so, there's also a recognition among Republicans that insulating Powell from political influence has its merits. Rep. Frank Lucas (R-Okla.) — the longest-serving Financial Services Republican — has been pushing for bipartisan legislation to do just that. And given how quickly economic outlooks have shifted during the Trump 2.0 era, it may be against the interests of GOP lawmakers to undermine public trust in a central banker who navigated the worst period of inflation in 40 years without triggering a recession.
'You don't want to weaken him. You want to strengthen him,' said Josh Lipsky, a former State Department and IMF official who's now the senior director of the Atlantic Council's GeoEconomics Center. 'More likely than not, we're going to have another bout of volatility in the coming months.'
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Driving the Day
The Bitcoin Policy Institute holds its 2025 policy summit with speakers including White House crypto adviser Bo Hines, Sen. Cynthia Lummis, House Majority Whip Tom Emmer, Rep. Warren Davidson and SEC Commissioner Hester Peirce. … Powell testifies before Senate Banking at 10 a.m. … House Financial Services holds a hearing on 'Reassessing Sarbanes-Oxley' at 10 a.m. … New home sales data is out at 10 a.m. … The Fed meets to discuss proposed revisions to its supplementary leverage ratio standards at 2 p.m. …
Previewing Powell — Katherine Hapgood reports that Senate Banking Republicans led by Sen. Tim Scott (R-S.C.) will ask Powell to 'address the Fed's 'lavish renovations, the agency's politicization and the need to empower newly confirmed Vice Chair for Supervision, Governor Michelle Bowman.''
Coalition time for 'O-Triple B' — Later this morning, Treasury Secretary Scott Bessent, Deputy Secretary Michael Faulkender and National Association of Manufacturers President and CEO Jay Timmons — along with representatives from U.S. manufacturing companies across the country — will convene at 9 a.m. to discuss Trump's megabill as the Senate moves to finalize its version, according to two people granted anonymity to discuss internal plans. Bessent met with Senate Republicans on Tuesday to encourage lawmakers to meet the president's July 4 deadline. NAM has been pushing for the bill's passage.
— Bessent met with Senate GOP members to encourage Congress to get the legislation to the president's desk by July 4, Jordain Carney reports. Per Meredith Lee Hill, House Speaker Mike Johnson has instructed lawmakers not to leave town and to keep their schedules flexible.
— The July 4 deadline is tight given how many policy questions are still outstanding, report Richard Rubin and Siobhan Hughes for WSJ. Deficit hawks in the House are starting to squawk over the Senate's version, which the Joint Committee on Taxation estimates will cost $4.2 trillion.
— Bessent told reporters that he expects Republicans will reach an agreement on the state and local tax deduction cap 'in the next 24-48 hours,' according to Bloomberg's Cam Kettles and Nacha Cattan.
Well, well, well — The Trump administration's attacks on Big Pharma have hammered the industry's share prices. In Washington, lawmakers are buying the dip, Amanda Chu reports.
— 'Representatives and senators purchased up to $2.9 million in pharmaceutical stocks in the first six months of the Trump administration, financial disclosures say, and Republicans outpaced Democrats in share purchases, investing as much as $1.8 million in drug companies, while Democrats were more likely to sell assets.'
The Economy
Soft data, muddy waters — The Chamber of Commerce's quarterly Small Business Index reflected a slight uptick in the economic outlook, according to survey data shared with MM. Slightly more than a third of the businesses surveyed said the economy is in good health, an increase from 29 percent during the first quarter. Fewer than 50 percent selected inflation as their chief concern — a first since mid-2022.
— JPMorgan's 2025 Business Leaders Outlook Pulse Survey — also out this morning — found that leaders of mid-sized businesses with between $20 million and $500 million of annual revenue are increasingly pessimistic in their economic outlook. Just 32 percent say they're optimistic, a decline of more than half since the start of the year, and roughly a quarter of respondents now expect a recession. Nearly 75 percent of those surveyed cited policy uncertainty as a reason for delaying their business plans this year.
'Businesses are operating with caution in the current environment,' Matt Sable, the co-head of JPMorgan Commercial Banking, said in a statement. 'Leaders are recalibrating where necessary to ensure they can continue to deliver for their clients and communities, highlighting their resilience and determination.'
Crypto
Floor vote — House leaders are looking at holding a vote on crypto legislation as soon as the week of July 7, Jasper Goodman reports. It may include a legislative package that would include new rules for dollar-pegged stablecoins as well as a broader crypto market structure bill, but no final decision has been made on whether or how to marry the efforts.
Uh-oh — The Bank for International Settlements — an organization known as the central bank of central banks — is cautioning about the proliferation of stablecoins, Declan Harty reports. The tokens do show 'some attributes of money,' the BIS said in a chapter in its annual economic report. But stablecoins 'fall short' of qualifying as a type of sound money — in part because of their potential use for money laundering and terrorism financing, it said.